Sensex edges higher after 1000-points loss on Budget day; these are the key reasons

Domestic equity market benchmarks Sensex and Nifty ended higher on Monday after the country’s manufacturing sector activity climbed to a near eight-year high in January. Apart from this, worries over deadly coronavirus and the Reserve Bank of India’s (RBI) monetary policy committee which will begin from February 4, kept market participants cautious. “Indian markets traded volatile in the first session of the week with investors assessing the implications from budget, overnight gains in US index futures and a sell-off in China. During the afternoon session, the markets traded in green as monthly survey that the country’s manufacturing sector activity climbed to a near eight-year high in January, driven by sharp rise in new business orders amid a rebound in demand conditions that led to rise in production and hiring activity,” Narendra Solanki, Head of Fundamental Research- Investment Services, Anand Rathi Shares and Stock Brokers said.

“The IHS Markit India Manufacturing PMI rose from 52.7 in December to 55.3 in January, its highest level in just under eight years. With budget event behind, trader’s now shifts focus back to the quarterly earnings season and the central bank’s interest rate decision later this week,” Narendra Solanki said.

Sensex, Nifty edge higher- S&P BSE Sensex finished 136 points or 0.34 per cent higher at 39,872 points, while the broader Nifty 50 index settled at 11,724 points, up 62 points or 0.53 per cent. “The Indian markets witnessed a volatile session but ended on a positive note as the investors absorbed the union budget disappointment. After a weak opening, buying in Auto and FMCG stocks provided support to the indices and as a result Nifty closed higher by 0.5% at 11,724,” Ajit Mishra, VP – Research, Religare Broking Ltd said.

18 out of 30 stocks in green- As many as 18 stocks out of 30 Sensex stocks ended in green today. Asian Paints, Nestle India, HUL, Bajaj- Auto were among the top gainers on the pack. Nestle India and HUL hit their 52-week high in today’s trade as the government on Saturday announced to abolish the Dividend Distribution Tax (DDT) from the company level. On the other hand, ITC, TCS, HCL Tech were among the top losers on the index.

Nifty Bank index gains 228 points- Among Nifty sectoral indices, Nifty IT, Nifty Pharma and Nifty PSU Bank index advanced the most. However, Nifty Bank index gained 228 points driven by IndusInd Bank, RBL Bank and ICICI Bank.

What market analysts have to say-

“Market is finding some sanity after the setback of not meeting high expectations from the budget, hereon the focus will be on corporate results and global trend. With valuations on the higher side, the on-going results reported has been mostly inline with estimates. Manufacturing PMI shows notable rebound providing a breather that economy will stabilize as mentioned in the budget,” Vinod Nair, Head of Research at Geojit Financial Services said.

“Bulls attempt a pullback after the hammering by the bears on the Budget day but, were unable to hold the indices at highs. Market breadth was on the negative side. 11500-11,550 is the support zone for the Nifty on the downside which is likely to get tested on the downside. In the near term sell on rallies should be the approach for near term traders. 11,900 is likely to act as near term resistance on the upside,” Amit Shah, Technical Research Analyst with Indiabulls Ventures Ltd said.

Source: Financial Express